Promoting Mediation while Protecting Voluntariness

Date: April 1st, 2011 | Filed under: mediation, Mediation & Company Law Articles | Tags: mediation

Every legal practitioner hopes that their client will walk away from his dispute satisfied with the result.  All too often, however, only one party will have such satisfaction, because the natural result of litigation is that there must be a loser.

Human relations are rarely as black and white as litigation would have it.  Usually there is a grey area where those in dispute can find a resolution satisfactory to all.  Mediation, and other forms of alternative dispute resolution[1], offer potential litigants a means of achieving the middle ground, while avoiding the stress, cost and waste of time concomitant with traditional litigation.

The advantages of mediation extend beyond individual disputes.  Mediation diverts disputes away from the over-burdened legal diary and a study conducted last year suggested that the State could save up to €200 million in legal fees by preferring mediation over litigation.[2]

For these reasons, advocates of mediation are keen to promote and encourage its use.  In adopting such measures to that end, however, legislators must be mindful that there is a fine line between promotion and compulsion.  It is easy to imagine a scenario in which the over-zealous supporter, with the very best of intentions, attempts to force mediation upon unwilling participants, thereby robbing the process of an characteristic which has long been acknowledged as key to its success – its inherent voluntariness.

In this paper, I consider the importance of voluntariness to the mediation process.  I discuss the means through which the High Court and Commercial Court already encourage mediation, the role of costs penalties in promoting mediation, the responsibility of the legal profession and the implication of each on the voluntariness of the process.

1. Voluntariness

Mediation works best when the participants come together with creativity and flexibility, resolved to find a solution to their dispute.  The outcome will be most satisfactory to participants who have exercised their self-determination in negotiating a resolution that best suits their needs.  Voluntariness underlies the participants’ ability to approach mediation in this manner.  Mediation seeks to resolve disputes by agreement.  When the mediation process has been forced upon an unwilling participant, the natural consequence is that the outcome is also imposed on them.  This must logically impair either their ability to reach agreement or their willingness to abide by any agreement reached.

The importance of voluntariness has been acknowledged by many Courts and commentators alike.  Mr Justice Kelly of the Irish Commercial Court has commented that “if mediation is… to be successful there has to be at least some element of goodwill.”[3] Voluntariness allows the parties to decide for themselves whether their case is appropriate for mediation, and some cases will not be.  In addition, the timing of referral to mediation can be key to its success and compelling mediation may encroach upon the parties’ ability to decide the point at which their dispute is ripe to be referred to the mediation process.[4] It has even been suggested that to compel parties to mediate is a violation of the right of access to the courts under Article 6 of the European Convention on Human Rights.[5]

The debate on the merits of compulsion does continue, however.  Those in favour of compulsion claim that mediation has a good success rate and mandatory mediation can be effectively integrated into the court process in order to catch more litigants in its net.  As with traditional attempts at settlement, it is often perceived that the party making the first invitation may be betraying some underlying weakness in their case and therefore litigants often need the initial ‘push in the right direction’ provided by mandatory mediation.  In addition, if their clients were required to engage in mediation, practitioners would be forced to develop their knowledge and hone their skills in the area.

A distinction can be drawn, however, between compelling participation in mediation and compelling consideration of mediation.  Until now, mediation has not been compulsory in Ireland, but the Courts have developed means of requiring litigants to seriously consider the option.  In my view, the benefits expounded by proponents of compulsion can be successfully achieved by the legal profession effectively encouraging litigants to mediate.  The latter approach is certainly preferable to resorting to blunt compulsion.

1. The Commercial Court

The Commercial Court has been at the forefront of the positive development which has taken place in the use of mediation in Ireland to date.  This has stemmed partly from Order 63A Rule 6(1)(xiii) of the Rules of the Superior Court (“RSC”), which was entirely novel in Ireland when initially introduced in 2004, which states that a Judge may direct that:-

the parties [have] time to consider whether such proceedings … ought to be referred to a process of mediation, conciliation or arbitration, and where the parties decide so to refer the proceedings or issue, to extend the time for compliance by any party with any provision of these Rules or any order of the Court.

Order 63A does not allow the Judge to require parties to mediate their dispute.  It does, however, allow him to order the parties to consider the possibility of mediation.    A practice has also developed that the Commercial Court will invite the parties to consider mediation, while stopping short of making a formal direction.  In either scenario, the Judge gives the parties an initial push towards mediating, without dictating how they must ultimately proceed.  Does this formula strike the balance between effectively encouraging mediation and ensuring that voluntariness is not encroached upon?

Where the Commercial Court suggests that mediation should be considered, it is clearly important that litigants approach the suggestion seriously.  This is not only because of the costs implications which failing to do so may have, but because of the overall impression which may be created by their failure to fully engage with the suggestion.  It is clear that, from the outset, a litigant’s approach to the conduct of litigation builds an impression of their bona fides.  Do those factors mean that the decision to mediate is no longer voluntary but rendered compulsory due to the other demands of litigation?  In my view, it does not.  The Court is mindful that not every case is suitable for mediation and will not expect litigants to pursue a futile course.  The expectation is that litigants approach the suggestion to mediate in a reasonable manner.  It is submitted that this is in itself is a reasonable and constructive approach for the Court to take.

Interestingly, in a recent article, Mr Justice Kelly reported that in his experience, litigants in the Commercial List respond in a more positive manner to his suggestion that they discuss mediation, than in circumstances where they are put under pressure to do so.   In the early days, the manner in which the Commercial Court directed litigants to consider mediation  “suggested a certain compulsion to the approach”.  In latter times, the Court has refined its practice, aiming to encourage rather than compel.  This, coupled with an improved understanding of ADR generally, has led to a better success rate.[6]

All this suggests that the more voluntary a referral to mediation is, the more likely it is to succeed.  While Order 63A is certainly a useful tool in promoting the use of mediation, a judge’s constructive and positive encouragement can be just as effective.  The flexibility with which the Commercial Court has approached the integration of mediation, and other ADR processes, into its operation, is commendable and encouraging and has undoubtedly accelerated the development of the use of ADR in commercial matters.

1. The High Court

Order 56A RSC, introduced last year[7], now allows any judge of the High Court to adjourn proceedings in order to allow the parties to consider pursuing ADR.  This is an important symbolic development,  illustrating that mediation and conciliation can be of utility outside the commercial sphere.[8]

Order 56A is formulated in slightly different terms to those of the Commercial Court rule.  It is contemplated an order would be made to adjourn the proceedings and either “invite the parties to use an ADR process to settle or determine the proceedings or issue”[9] or “where the parties consent, refer the proceedings or issue to such process”.[10]

In addition, a new concept is introduced whereby litigants may be invited to attend an information session on mediation or conciliation.  This is potentially a very effective means of encouraging litigants to attempt mediation by developing their understanding of the practicalities and benefits of the process.  If successful, this measure may also be highly effective in protecting the voluntariness of the mediation process, empowering litigants to determine if mediation is appropriate to their dispute.

It will be interesting to observe the development of Order 56A by the Courts; whether it will successfully encourage the pursuit of mediation by High Court litigants and whether such mediations generate positive results.  It will be more interesting still to observe whether the experience of the High Court will reflect that of Mr Justice Kelly, that more willing candidates produce more successful mediations.

1. Costs Penalties

Since the decisions in Halsey and Burchell v Bullard[11], English courts have been willing to impose costs penalties on litigants for unreasonably refusing to refer their dispute to mediation.  In those cases, the Court of Appeal considered a number of factors in assessing whether a refusal was unreasonable.  The Court considered the nature and merits of the case, whether other settlement options were explored, the relative costs of pursuing the various options and placed particular emphasis on whether mediation had a reasonable prospect of success.

Although such a power was never expressly provided for in Ireland, since its inception, practitioners in Ireland were concerned that the Commercial Court could choose to follow the English approach, given the broad provisions of Order 99 RSC.  Accordingly, in advising their clients, many practitioners emphasised the importance of approaching suggested mediation with reasonably and with bona fides.   Notwithstanding practitioners’ concerns, however, Mr Justice Kelly indicated in a speech in 2008 that he had never made a mediation-related costs order and was “delighted to say that [he had] … never yet had a case where someone behaved unreasonably in relation to a request to mediate”.[12] This trend seems to have continued to date.

A change may be on the horizon, however, due to the recent amendment of Order 99.  Order 99 Rule 1B[13] now states that:

… in considering the awarding of the costs … [the Court] may, where it considers it just, have regard to the refusal or failure without good reason of any party to participate in any ADR process referred to in Order 56A, rule 1, where an order has been made …

The creation of this express power to impose costs penalties arising from a refusal to participate in mediation, must renew the concerns of practitioners that the judiciary may be increasingly minded to make such orders.  The potential imposition of costs penalties certainly increases the onus on litigants to seriously consider referral to mediation, possibly encroaching on voluntariness; but does this lead to successful mediation?

In its 2008 Consultation Paper[14], the Law Reform Commission considered research conducted in the UK on the success of various methods of promoting mediation.[15] The research demonstrated that where costs sanctions were not a possibility the uptake of mediation was relatively low, whereas the threat of costs sanctions led to higher uptake but lower settlement rate.  The research certainly suggests that the voluntariness of the mediation process is a key factor in its success.

Notwithstanding those findings, the Commission’s Report ultimately recommended that in considering an award for costs it is appropriate that Courts consider an unreasonable refusal made in connection with a judicial invitation to consider mediation.[16]

It is unproductive to chase unwilling litigants into mediation by threats of costs sanctions, if their engagement in the process is likely to be poor and the mediation will simply serve to prolong the process and increase costs.  The availability of costs sanctions may, however, serve as an important reminder to litigants, and their advisers, that the Court is conscious of the utility of mediation.  If the situation described by Mr Justice Kelly, which pertained in the Commercial Court in 2008, continues into the future and extends to the High Court, perhaps Order 99 Rule 1B will remain an unutilised symbol of the efficacy of agreement.

1. Conclusion: the Role of Solicitors

In light of the foregoing, it seems clear that there is little use pursuing schemes which attempt to promote mediation by compulsion.  Of course, the volume of mediations would certainly rise if litigants are compelled to mediate, but the likely outcome of this type of mediation is not promising.  Accordingly, it is necessary to pursue alternative methods of promoting and encouraging mediation, and, it is submitted, the ultimate responsibility in this regard must fall on the legal profession.

Practitioners educated in the benefits and practicalities of mediation are best placed to encourage their clients to willingly pursue alternative means of dispute resolution.  Practitioners fearful of mediation, themselves unwilling to engage in ADR, are entirely unable to facilitate their clients in doing so.  The role of solicitors and other advisers has been key in the growth of mediation to date, but this has not yet come far enough.  The Law Reform Commission has therefore made two very significant recommendations in respect of promoting mediation via the legal practitioner.

First, the Commission recommends that legal practitioners at all levels should be better educated in the area of alternative dispute resolution.  Education is key to altering our legal culture, which currently focuses so heavily on adversarialism.[17]

Second, the duty of solicitors to advise their clients in relation to mediation must be adopted, not only as part of our culture, but as part of our law.  Practitioners must consider the availability and viability of mediation before proceedings are issued, and throughout the conduct of proceedings, and advise their clients accordingly.  Although compulsion may not serve litigants well, the same cannot be true for practitioners.  The legal profession may itself need a ‘push in the right direction’ to ensure that mediation develops from being a possible alternative into a firm feature of everyday dispute resolution practice.  Therefore, in order encourage this transition and to ensure that litigants are properly appraised of their options, the Commission recommends the introduction of a “Mediation and Conciliation Certificate”.  It is suggested that a certificate, stating that mediation or conciliation has been considered, should be signed by parties to the claim before proceedings are commenced.  The solicitor acting for the litigant must also sign the certificate stating that they have advised the person to consider mediation and conciliation.[18]

The Commission has put forward many other important suggestions, which could improve mediation practice and thereby encourage referral to ADR.  The suggestions outlined above are particularly significant, however.  They recognise that involuntary mediation is not worth pursuing and compulsion is better aimed in a different direction – toward the legal profession itself.

Moya Moore

Trainee Solicitor

McCann FitzGerald

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[1] Hereinafter referred to as “ADR”.

[2] Carol Coulter, “Mediation could save State €200m”, Irish Times, 6 March 2010, echoing the suggestion of the 2009 McCarthy Report  that State bodies should be required to mediate their internal disputes, (Report of the Special Group on Public Service Numbers and Expenditure Programmes, p.71-72).

[3] Speech of Mr Justice Kelly at the “Mediation Works” Symposium, 27 May 2008, available at: http://www.themii.ie/documents/Mr_Justice_Peter_Kelly.pdf

[4] For further discussion on the timing on mediation see, Mr Justice Kelly, “Alternative Dispute Resolution and the Commercial Court” 2010 Arbitration and ADR Review, Issue 2, 92.

[5] Halsey v Milton Keynes NHS Trust and Steel v Joy [2004] EWCA Civ 576.

[6] Mr Justice Kelly, “Alternative Dispute Resolution and the Commercial Court” 2010 Arbitration and ADR Review, Issue 2, 92, at 94-95.

[7] The Rules of the Superior Courts (Mediation And Conciliation) 2010 (Statutory Instrument Number 502 of 2010).

[8] See Stewart & Moore, “Mediation in Ireland – An Improving Environment” (2005 12 (5) CLP 115, in which the importance of extending the reach of mediation to SMEs is highlighted.

[9] Order 56A Rule 2(1)(i) RSC.

[10] Order 56A Rule 2(1)(ii) RSC.

[11] [2005] EWCA Civ 358.

[12] Speech of Mr Justice Kelly at the “Mediation Works” Symposium, 27 May 2008.

[13] Rule 1B was inserted into Order 99 under the provisions of the Rules of the Superior Courts (Mediation And Conciliation) 2010 (Statutory Instrument Number 502 of 2010).

[14] Law Reform Commission, Consultation Paper: Alternative Dispute Resolution, July 2008, LRC CP 50/2008, Chapter 3, p.92 f.

[15] Genn, Twisting arms: court referred and court linked mediation under judicial pressure, (Ministry of Justice for England and Wales Research Series 1/07, May 2007).

[16] Law Reform Commission, Report: Alternative Dispute Resolution: Mediation and Conciliation, November 2010, LRC 98-2010, p.93.

[17] Ibid. at p.73.

[18] Ibid. at p.77.